This is not a correlated market. The dollar is Up+ and Crude is Up+ which is not normal and the 30 year Bond is trading Higher. The Financials should always correlate with the US dollar such that if the dollar is lower then bonds should follow and vice-versa. The S&P is Higher and Crude is trading Higher which is not correlated. Gold is trading Lower which is correlated with the US dollar trading Up. I tend to believe that Gold has an inverse relationship with the US Dollar as when the US Dollar is down, Gold tends to rise in value and vice-versa. Think of it as a seesaw, when one is up the other should be down. I point this out to you to make you aware that when we don't have a correlated market, it means something is wrong. As traders you need to be aware of this and proceed with your eyes wide open. Asia is trading Mixed with half the exchanges HIgher and teh other half Lower. Currently all of Europe is trading Higher with the exception of the Milan exchange which is Lower at this time.

Possible challenges to traders today

Prelim UOM Consumer Sentiment is out at 10 AM EST. This is Major.
Prelim UOM Inflation Expectations is out at 10 AM EST. This is Major.

Bias

Yesterday we gave the markets an Upside bias as the Bonds and Gold were both trading Lower Thursday morning and this usually reflects an Upside day. The markets didn't disappoint as the Dow climbed 19 points Higher, the S&P gained 20 and the Nasdaq 109. Today we aren't dealing with a correlated market and our bias is Neutral or Mixed.

Could this change? Of Course. Remember anything can happen in a volatile market.

Commentary

Finally after nearly a week of down or mixed days we finally see some upward trend and correlation. All indices gained ground yesterday as initial Unemployment Claims came in lower than last week by 9,000 and the markets claimed that as a victory. It came in at 376,000 versus 385,000 last week. However inflation may be rearing its ugly head as that came in at 0.6% versus 0.4% expected. This may very well be a temporary situation as the economy is opening we are seeing shortages in many areas and sectors. Case in point automobiles used integrated chips as a major component to control the various systems in a car. Now that the economy is opening up, demand for autos is rising and chips are in short demand which means a price increase and we are seeing that across the board. Time will tell how this all works out but we believe it is a temporary scenario.

Author

Nick Mastrandrea

Market Tea Leaves

EUR/USD tests nine-day EMA support near 1.1850

EUR/USD inches lower during the Asian hours on Monday, trading around 1.1870 at the time of writing. The 14-day Relative Strength Index momentum indicator at 56 stays above the midline, confirming improving momentum. RSI has cooled from prior overbought readings but stabilizes above 50, suggesting dips could stay limited before buyers reassert control.

GBP/USD flat lines as traders await key UK macro data and FOMC minutes

The GBP/USD pair kicks off a new week on a subdued note and oscillates in a narrow range, just below mid-1.3600s, during the Asian session. Moreover, the mixed fundamental backdrop warrants some caution for aggressive traders as the market focus now shifts to this week's important releases from the UK and the US.

Gold slides below $5,000 amid USD uptick and positive risk tone; downside seems limited

Gold attracts fresh sellers at the start of a new week and reverses a part of Friday's strong move up of over $150 from sub-$4,900 levels. The commodity slides back below the $5,000 psychological mark during the Asian session, though the downside potential seems limited amid a combination of supporting factors.

Bitcoin, Ethereum and Ripple consolidate within key ranges as selling pressure eases

Bitcoin and Ethereum prices have been trading sideways within key ranges following the massive correction. Meanwhile, XRP recovers slightly, breaking above the key resistance zone. The top three cryptocurrencies hint at a potential short-term recovery, with momentum indicators showing fading bearish signs.

Global inflation watch: Signs of cooling services inflation

Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.

Ripple Price Forecast: XRP potential bottom could be in sight

Ripple edges up above the intraday low of $1.35 at the time of writing on Friday amid mixed price actions across the crypto market. The remittance token failed to hold support at $1.40 the previous day, reflecting risk-off sentiment amid a decline in retail and institutional sentiment.